Imagine, if you will, that you’re an anesthesiologist. You’ve been part of a successful practice for over 10 years. You can walk down your neighborhood street and run into mothers whose epidurals you’ve helped place. You’ve established a home, a community, and your children are in a great school system.
One uneventful day, say Wednesday, you get an email from the hospital administrators announcing that there’s going to be a meeting on Friday. You’re not sure what it could be about, but you don’t give it much thought.
When Friday rolls around, you discover that the meeting was held to inform you that the contract for your group has not been renewed and a new national practice management company will be taking over all anesthesia services shortly. Details are pending, but from what you’ve heard, you will have the option to stay on board and accept 30% less than what you're making now or move on.
Sound impossible? Unfortunately, based on several accounts from close friends and colleagues in just the past few years, this situation is more common than you’d think.
Medicine Has Definitely Changed
We pursued this career in medicine because we were passionate about medicine, about helping people, and making a difference. One of the nice benefits along the way is that it seemed to promise a pretty good, stable financial life with job security. How many of us saw ourselves as the gray-haired physician, wise in all of his or her knowledge, smiling over our patients?
However early in my career, I began to realize that all doctors don’t necessarily live the lifestyles you see in TV shows or movies with country club memberships and fancy cars. And I was fine with that.
At least I’d have a stable income and be able to provide for my family while enjoying what I'm doing, right? At least I’d be better off than some of my other college friends who went into finance, only to lose those jobs when the economy crashed. I had a set path, and as long as I kept on it, then life stability was in my future.
Well, I've found out that this isn't necessarily true.
There may be a demand for physicians, but it doesn’t mean your job is secure. As we hear of other industries in upheaval, some entire industries collapsing, and huge industrial stalwarts having financial issues (GE was just taken off the Dow by the way), and with job security at an all-time low in many ways . . . are we immune to it all?
I work in an academic setting where I get to talk to graduating residents and fellows about their future plans. Increasingly, people are flocking to jobs that provide stability and security, like some large unnamed healthcare institution prominent in my area that is known for pensions, educational half-days, and a great healthcare plan.
Apparently, very few doctors wanted to work there in the past, but with everything that’s going on in healthcare, it’s become an extremely coveted health system to work for–and much of it has to do with job security and benefits.
Why Job Security in Medicine is a Myth
In some ways it saddens me to say it, but I think that in modern times, having job security as physicians is an illusion, a myth. Here’s why…
You Can Be (And Are Being) Replaced by Non-Physicians
I’ll be honest, there’s a certain amount of pride that I carry being a physician. It wasn’t easy getting here, and surely having that degree and training as well as years of experience must make it tough to be replaced. Plus, you constantly hear about a physician shortage nationwide. The basic laws of macroeconomics indicate that a reduced supply should mean increased demand, and as a result, prices and wages should increase, right?
Wrong. Unfortunately, in healthcare, the macro solution to that physician shortage has been to find other people and ways to fill that gap: train midlevel providers and empower them with the same abilities as physicians and create parity by treating patients through algorithms. The physician is merely reduced to a “provider” and a technician, and one that can be replaced by either another physician at a cheaper rate or another type of provider.
Regardless of how you feel about this or whether you believe it’s right or wrong, it is happening. Just as in my opening example, anesthesia groups and hospitals are asking, “Why employ a group of all physicians when you can employ ‘physician extenders’ or a mix at a much lower cost?”
You Can Be (And Are Being) Replaced by Other Physicians
Physicians used to be their own brand to a certain degree. Being in private practice meant that patients were coming to YOU because of your reputation and skill level. Look around, private practice today is being squeezed out of existence.
Healthcare systems spend millions of dollars building up their own brands so that patients now think of receiving care from a particular health system vs. a particular physician. Ask a friend now who they go to see for their healthcare. Most will tout what health system they belong to. Increasingly patients are of the mindset that they don't really care who they go to, as long as it's within a health system with a good reputation, it's covered by their insurance, and it's convenient to get an appointment.
As a result, any leverage that physicians once had as a unique and powerful brand is fading. Not happy with the deal you've got with your hospital? Well, that's okay, we'll replace you with another physician willing to accept our terms and it's “plug and play.”
Unfortunately, newer physicians will happily take the terms to have a job. I see it happening all over the place. Like the opening story, if you're not willing to take a 30% haircut on your salary, move on, we'll surely find someone else to fill the void and things move on like usual. You will be replaced by a younger, hungrier physician.
Physicians are not organized in the form of unions and unfortunately, the large medical organizations we pay large dues to each year haven't been able to create the sort of leverage and bargaining power to prevent these things from happening.
Automation and Technology
Seemingly every field is falling victim to automation and technology. Are physicians immune to this?
I just read about how automation is killing certain jobs and industries. It’s easier for us to imagine a machine flipping burgers, but how could it replace a physician, right? While the Sedasys machine suffered a very public defeat, the fact that it was even developed and no doubt still on the horizon does not bode well for anesthesiologists.
Other fields in medicine besides anesthesiology could one-day fall victim to this as well. Radiology, Surgery, and other fields associated with a high cost (physician salaries) are being targeted as we speak.
But what about empathy, human touch, and human decision-making? Unfortunately, those things are not enough to keep “progress” from happening. Autonomous human decision-making by a physician is actually becoming increasingly highly discouraged. Follow the health system protocol, otherwise, face disciplinary action and in some cases financial penalties.
This one speaks mostly for itself. In the litigious environment in which we work, there’s always a risk that a poor outcome could end your career and financial wellbeing.
That’s what malpractice insurance is for right? Well, only to a certain degree. Sure, lawsuits are mostly settled under the limits of what insurers are willing to pay out. In addition, creating a separate legal entity for your medical practices should shield litigators from going after your personal assets. So you should be able to sleep safe and sound, however, dig a little and you will hear stories that will tell you otherwise.
Besides pure financial damages, if a lawsuit is high-profile enough, think about how that will help or hurt your career regardless of the outcome of the case. Imagine that you’ve built up a reputation that you’ve worked hard for over the years, and then you get sued in a very public way. A good or poor reputation can make or break a career like ours.
The Medical Board, Licensing, and Credentialing
We tend to take our licenses to practice medicine for granted. I think most of us received our first license after our internships. In my residency, it was a requirement to advance. It's something we're entitled to after all those years of schooling and training.
The fact is, with every case you take, your medical license is potentially on the line and therefore your career and financial pipeline. I didn’t ever think about this until a friend’s license was put at risk for a poor outcome. He did everything he could to help his patient get through a very stressful situation, yet he was still put through the wringer. He had to spend an extraordinary amount of money to hire his own lawyers for not only the lawsuit itself, but also to go before the medical board to fight for the right to keep his medical license.
Some might say, well that's what should happen for someone practicing outside the standard of care. I understand that aspect, that there needs to be accountability. However, I know personally that he performed admirably in an extremely difficult situation yet still suffered for years dealing with the aftermath. How do I know this? Well, I was there in the room when it happened, providing care as well. I was then asked to be a witness in front of the medical board where his career was in the hands of a judge. I saw a small part of the process, and it was not pretty.
Thankfully the judge ruled in his favor, but what if she didn't? What would've happened to his career? Would he be able to reinstate his license at a later date? Would he ever be able to be credentialed at another hospital? Who knows.
Think you can’t be replaced as head of a department or as a key faculty member, even at an academic institution? Well, if you’re not performing or producing like they would like, they can find someone else. I’ve seen it happen.
It seems as if the relationship between hospital administrators and doctors is increasingly getting more impersonal, and as larger corporations take over health systems and consolidate, the decisions are being made at a distance, making it easier to change how things operate. Not meeting defined objectives and revenue targets, sorry, your contract may not be renewed and you may be replaced with someone more aggressive who might meet those RVU or research goals. I've seen this happen firsthand with family members who were physicians.
I was fortunate to still be in training during the Great Recession of 2008. But I heard the stories of physicians not being able to find work. Elective surgeries were down, and so physicians who particularly relied on those, like plastic surgeons, cosmetic derms, and the anesthesiologists who helped them were struggling.
It’s even been said that our profession is recession-proof, yet as I started working in 2011, the effects were still being felt and caseloads still were down. Finding cases to staff in the hospital wasn't easy and outside surgical centers were hurting. Sure, things are roaring again and much better, but as we’ve seen before, history eventually repeats itself.
Many of us perform technical and highly-skilled procedures. That’s what makes us marketable. If you’re a surgeon, your hands are everything. It’s like an athlete who relies on their body for their livelihood.
However, we’re human and we live life. Injuries happen and careers get cut short. Many of us have the impression it’ll never happen to us, but ask any disability insurance provider how many doctors go on claim and they’ll tell you: Physicians get hurt like everyone else.
Sure, statistics will tell you that the likelihood of such an injury is low, but I think Larry Keller of Physician Financial Services puts it best, “The reality of the situation is that if they [physicians] are disabled, the statistic is 100% and nothing else matters. One's ability to earn an income is their most valuable asset and what allows them to build a lifestyle for themselves and their family, pay down debt and create wealth. It is the foundation of a financial plan and without it, the plan will likely fail on all levels.”
Where would that leave you? What would you do next? Personally, I tell everyone it’s vitally important to be well insured against this happening. Well, that is, until you have enough passive income that you're self-insured some day.
Is Being a Physician Bad for Your Financial Health?
Now, I don’t want to create the misconception that being a physician is completely bad for your financial future. Yes, student loans are rising and physician reimbursements are falling, however, I still believe there’s a definite potential for a great financial life–in spite of what you hear.
According to Ryan Inman, a financial advisor that works exclusively with physicians and the founder of FinancialResidency.com, “Armed with the proper financial knowledge, physicians can take hold of their financial futures and really help shape their personal lives to how they want to live it.”
In my opinion, it all means that you can’t just be a doctor anymore. You can’t expect to just go to work, clock in, and clock out. You can’t put all your eggs in one basket and expect that a certain lifestyle is guaranteed.
Is There a Solution?
So what can we do? Well, we can complain and mourn the loss of the “golden age of medicine” (which are normal reactions). However, we need to quickly transition and take the situation into our own hands. We can and should hedge our bets, and not rely on one single source of income by creating additional streams instead.
But will that compromise your ability to be the best physician you can be? Some might have you believe that, but try to recognize what their incentives are to say so.
Let’s be honest, no one will be as good an advocate for yourself and your family as you. Spend more time on creating multiple streams of income (particularly passive ones like real estate crowdfunding for example). Figure out why you might not be creating passive income and fix it. Take advantage of all of the resources out there to help guide your financial journey, like blogs, podcasts, online courses, and our Facebook Group, Passive Income Docs.
I believe that will lead to a life in which you can practice medicine on your own terms–on your own time, how much you want, and where you want. In essence, the key to surviving the unknown future is to adapt to the changes, invest well, be proactive, be humble, and simply… create your own job security.